Target (TGT) should have paid more heed to an aphorism coined by one of the business world's leading oracles, Warren Buffett.
"It takes 20 years to build a reputation, and five minutes to ruin it," the famed investor once said. "If you think about that, you'll do things differently."In Target's case, the retailer is finding that its response to a massive security breach that resulted in the theft of 40 million credit and debit cards is falling flat with consumers.
Target's brand has plunged in perception, according to YouGov's BrandIndex, which taps into an online panel of 2.5 million people to measure how consumers rate corporate reputations.
In the day following the company's disclosure of the hack, Target's brand plunged by 35 points on BrandIndex's scale, which ranges from a high of 100 to a low of -100. That means that Target's brand score dropped to -9 on Dec. 20, from 26 points the week before the security breach was announced.
If that's not bad enough, Target's gone further into the red, despite a discount offer last weekend and efforts by the retailer to staff up call centers and to reach out to customers.
The company's BrandIndex score stood at -19 on Dec. 23.Despite the 10 percent discount and the offer of free credit monitoring, "the retailer has reached its lowest consumer perception point since at least June 2007," BrandIndex managing director Ted Marzilli wrote on the service's blog. "This also marks the first time since that same time that Target has had more negative perception than positive perception."
While many say they can understand a store getting hacked, they're having problems getting their heads around what one customer called a "disheartening" response to the security breach. Many are vowing to avoid shopping at Target, while others have canceled their REDcards, credit cards issued by the retailer, or are planning to sue.
Adding the woes of Target shoppers was a report from Reuters that the hackers had also stolen encrypted PIN numbers for debit cards. Target told Reuters that "no unencrypted PIN data was accessed" and that there was no evidence that PIN data had been compromised.
Target didn't immediately respond to email requests for comment from CBS MoneyWatch.
For Target, the loss of brand perception could present a billion-dollar blow, given that its brand is valued at $25.5 billion, according to global brand consultancy Interbrand. That ranks the retailer as the second most valuable retail brand in the U.S., trailing Wal-Mart.
Target may want to look to other corporate hacking victims for some hope.
Sony Online Entertainment's PlayStation brand recovered from its 2011 hacking in about eight weeks, while Citibank's brand recovered just four weeks after its 2011 credit card hack, BrandIndex notes.